Acadia Healthcare Facilities in Midwest Faces Legal Action For Holding Patients For Insurance Money

Investigations unveil systemic failures and violations in Acadia Healthcare's operations in order to increase profits by scamming insurance companies

Reeve B. Waud, Founder, Chairman of Acadia's BoardPhoto byScreen Capture/Youtube Video [Creator]

Acadia Healthcare Under Legal Fire for Alleged Unlawful Patient Detentions

Acadia Healthcare, a prominent operator of psychiatric hospitals across the United States with many in the Midwest and 7 in Illinois, has come under intense scrutiny following a New York Times investigation that revealed the company has been detaining patients against their will, often without medical justification. The investigation, led by reporters Jessica Silver-Greenberg and Katie Thomas, uncovered disturbing practices at Acadia facilities, where patients seeking routine mental health care found themselves locked in psychiatric units involuntarily. These revelations have raised significant concerns about the company's operations and its impact on vulnerable individuals.

Allegations of Unlawful Detentions Across Multiple States

The New York Times' investigation, based on records from 12 of the 19 states where Acadia operates, uncovered that the company has been reported for unlawfully detaining patients in numerous instances. These reports, provided by patients, employees, and law enforcement officers, suggest that Acadia has been engaging in practices that violate state laws and patient rights. The investigation highlighted cases where individuals who sought emergency mental health care were instead transferred to Acadia facilities, where they were confined without clear medical necessity.

Acadia employees disclosed to the Times that the company employs various strategies to secure insurance coverage for extended patient stays. These tactics include exaggerating symptoms, manipulating medication dosages, and arguing that patients require prolonged hospitalization due to alleged medical instability. Such practices not only raise ethical questions but also point to systemic issues within Acadia's operations.

Broader Legal Troubles and Prior Allegations

The recent investigation is not the first time Acadia Healthcare has found itself embroiled in legal disputes. The company has a history of legal challenges, including a high-profile case in New Mexico. In 2019, a lawsuit was filed against Acadia and several associated entities, including Youth and Family Centered Services of New Mexico, accusing them of negligence in a foster care case involving the sexual abuse of a child.

The lawsuit alleged that Acadia and its affiliates failed to protect an eight-year-old girl who was placed in a foster home under the care of Clarence Garcia, a known sexual abuser. Despite being aware of Garcia's history of abuse, the child was placed in his care, leading to repeated assaults. The lawsuit also highlighted broader issues within Acadia's foster care operations, including inadequate staffing, poor oversight, and a disregard for the safety of children in their care.

In 2024, a New Mexico jury awarded a staggering $485 million in damages to the victim in this case, further underscoring the severity of the allegations against Acadia. This case was one of several filed against the company, indicating a pattern of legal and ethical violations.

Acadia's legal troubles have had a notable impact on its financial performance, with the company using a combination of insurance funds, cash reserves, and credit lines to cover the settlement costs.

Despite the significant financial hit, Acadia attempted to spin the settlement as a positive outcome, noting that the potential liability could have been much higher indicating the crime was not as severe as it was claimed.

Senate Investigation Exposes Systemic Failures in Acadia's Operations

The legal issues surrounding Acadia Healthcare have not been limited to individual lawsuits. In 2024, a Senate Finance Committee report unveiled widespread problems within the company's operations, particularly in its residential treatment facilities for children. The report which was the result of a two-year investigation, documented numerous instances of physical and sexual abuse, dangerous restraint practices, and civil rights violations at Acadia facilities.

The Senate investigation found that Acadia's facilities, along with those operated by several other large behavioral health companies, were putting profits ahead of the safety and well-being of children in their care. The report detailed how these companies, reliant on per diem payments from Medicaid and other government sources, often operated at full capacity without adequate staffing or qualified personnel. This profit-driven approach led to severe neglect and abuse of the children entrusted to these facilities.

The Senate report also highlighted the overuse of seclusion and chemical restraints, with instances of children being subjected to both practices simultaneously in violation of federal regulations. These findings were particularly alarming given the vulnerable populations served by these facilities, including children with developmental disabilities and those in foster care.

Senate Hearing and Calls for Reform

The release of the Senate report was followed by a hearing in which lawmakers and advocates called for urgent reforms to address the systemic issues uncovered by the investigation. Senator Ron Wyden, who chaired the Senate Finance Committee, emphasized the need for stricter oversight and regulatory enforcement to prevent further abuses in residential treatment facilities.

Wyden criticized the use of taxpayer dollars to fund facilities that engage in such harmful practices, highlighting the need for accountability in the use of public funds. He expressed hope that the findings of the report would lead to legislative action to protect vulnerable children from further harm.

The Senate report recommended several measures to address the issues identified, including comprehensive staffing reviews, increased use of security cameras, and stricter adherence to federal regulations on restraints. The committee also urged state and federal oversight agencies to ensure that corrective actions are implemented across entire company networks, rather than focusing solely on individual facilities.

Continued Scrutiny and the Path Forward

The new revelations about Acadia Healthcare's practices have sparked widespread concern and outrage, leading to increased scrutiny of the company's operations. The Senate investigation, coupled with ongoing legal battles, has put Acadia in the spotlight once again and raised questions about the broader state of mental health and foster care services in the United States.